Hi everyone — welcome to another issue of Naavik Digest. If you missed our last one, be sure to check out our earnings coverage of Xbox, Stillfront, and Ubisoft. 

In this issue, we’re taking a look at the current portable gaming console market amid reports of Nintendo’s next Switch arriving in 2024 and a host of new competitors challenging the Steam Deck. 

How Mythical Games is Balancing Web2 & Web3

Mythical Games is one of the busiest operators in the web3 ecosystem, with a finger in many pies. The company is the creator of the licensed mobile football game NFL Rivals, which crossed 1 million downloads just a couple of months after its launch earlier this year, and Blankos Block Party, a multiplayer universe available on the Epic Games Store. In addition, Mythical operates the Mythos Foundation, through which it partners with other traditional game developers, web3 developers, and esports and guild operators, and operates its own Mythical Platform for publishing third-party games.

There’s also the $MYTH ecosystem token, and the small matter of about $300 million raised in venture funding over the past couple of years, including $37 million in a Series C extension announced in late June of this year. In this episode, host Niko Vuori talks with Mythical founder and CEO John Linden about the company’s various initiatives, its roadmap going forward, and how web3 hooks drive improved monetization and retention. To learn more, make sure to visit Mythical’s website here. You can also find John Linden on LinkedIn.

As always, you can find the Naavik Gaming Podcast on YouTube, Spotify, Apple Podcasts, Google Podcasts, our website, or anywhere else you listen to podcasts. Also, remember to shoot us any questions here.

#1 The Portable Game Console Boom

By Nick Statt, Naavik Managing Editor

Source: Valve

Gaming hardware manufacturers are increasingly eager to meet consumers where they are, and nowadays that increasingly happens to be away from the living room. The portable gaming market, sometimes referred to as the handheld gaming market, compromises any and all single-purpose gaming machines that integrate a screen, control mechanism, and chipset all in one device. 

Although mobile gaming clearly emerged as the big winner over the last decade in terms of ubiquitous availability and amassing the largest consumer base, we’re starting to see the pendulum swing in the other direction. Dedicated portable consoles are now home to some of the most exciting hardware advancements in gaming as manufacturers try to squeeze more power into smaller packages and also conceive of ways to use these devices as bridges between traditional methods of play.  

With the exception of Nintendo, major gaming hardware manufacturers had largely abandoned the portable gaming market by the mid-2010s, with the PSP and Vita handhelds left to wither by Sony after poor sales, and virtually no interest from PC and peripheral makers like Asus, Lenovo, Logitech, and Razer. Since the release of the Nintendo Switch in 2017, the market has exploded in popularity, and all of the above-mentioned companies are now in the game. 

A new report released last week from market research firm Fact.MR estimated the size of the portable gaming market at $15 billion, with a CAGR of 6%. By the end of 2033, the market is estimated to reach $27 billion. Thanks to the success of Valve’s Steam Deck, portable PCs are now a major growth segment of the market, too, alongside growing interest in cloud gaming-centric handhelds like Lenovo’s G Cloud, the Razer Edge, and Sony’s new Project Q. 

Let’s detail each of the major players in the portable gaming market, as well as go over the format of portable gaming these companies specialize in. 

Nintendo Wants to Stay the Hybrid King

Source: Nintendo

Nintendo is far and away the portable gaming market leader, with more than 125 million Switch units sold to date over the last six years, thanks to its first-party software library, hardware spinoffs like the Switch Lite, and its focus on the hybrid format that straddles the line between portable and TV play. Nintendo is also gearing up for the Switch’s second act. 

  • A new report from VGC this week said developer kits for Nintendo’s successor to the Switch are in the hands of key partners. A release date is tentatively pegged for late 2024. The report also says Nintendo may ship the device with an LCD screen to save on hardware costs, as it expects to expand storage capacity on the device to accommodate for higher-fidelity games running on a much-improved processor. 
  • Nintendo has started making public statements about the Switch’s future, including that it plans to try and move as many current Switch owners to the new device with a “smooth transition” using its Nintendo Account platform. No word yet on backward compatibility, but it appears at least likely the new Switch will support its predecessor’s library. 
  • For Nintendo, remaining the portable gaming market leader is a key pillar of its strategy. While a vast majority of software sales on the Switch are from first-party titles, nearly a fifth of the company’s game sales come from third parties. That’s not insignificant, and while it is true that Nintendo largely operates in a world of its own — away from the competition between PlayStation and Xbox and safely far ahead of the Steam Deck — it may still be in the company’s best interest to keep the Switch a more desirable destination for indie gaming while also opening the doors to more graphically intensive titles.
  • After all, Microsoft seems intent on publishing Call of Duty on Switch once it completes its Activision purchase, which could help catalyze a larger chunk of third-party publishers to consider Nintendo’s handheld as a viable alternative to the PS5 and Xbox Series devices.
  • If the sequel to the Switch does end up being powerful enough to run AAA games from third-party publishers, that would certainly make it an even more attractive console than it is today. But it’s perhaps too early to tell whether Nintendo is interested in capturing more of that part of the software market until we know exactly how powerful the Switch 2 will be.

Steam Deck Leads the Portable PC Crowd — But Competition is Heating Up

Asus’ new ROG Ally, which went on sale for $600 in June, is the most formidable competitor to Valve's Steam Deck. Source: Asus

Valve’s Steam Deck arrived in February 2022 and delivered much more powerful components than the Switch with a much more flexible software platform that supported Steam games, emulators, and all sorts of third-party software. Now, scores of other manufacturers are intent on capturing more portable PC market share in the niche but fast-growing segment. 

  • Valve hasn’t released sales figures from the Steam Deck beyond saying it shipped more than 1 million units as of October 2022, though one can imagine the device selling at least 1 to 2 million more units since then, considering how long the Steam Deck has remained fixed near the top of the company’s sales charts
  • Suffice it to say the Steam Deck isn’t a big seller, at least not by standard game console metrics. But Valve is less interested in outselling the competition than in helping create an all-new category. 
  • While the Stream Deck has become synonymous with portable PCs, the competition is starting to seriously heat up. Asus has its ROG Ally; Chinese hardware firm Ayaneo makes the Air, Next, and Neo lines; Ayn developed the Loki and Odin lines; and GPD released the Win 4. As of this week, Lenovo is also getting involved, with a portable reportedly called Legion Go in the works. 
  • Asus is clearly the most formidable challenger to the Steam Deck with the recently released ROG Ally, which starts at $600. But Ayaneo has been dominant in the higher-end portable PC space — the most expensive Ayaneo Neo 2 available costs $1,500 — while Ayn has been making strides in the entry-level portion of the market. Right now, it’s pretty much anyone’s game, which is leading to fierce competition on price and a remarkable number of new handheld variants from each manufacturer.  
  • According to analyst Mat Piscatella of Circana (formerly the NPD Group), U.S. gaming hardware sales jumped 23% year-over-year to $4.7 billion in June, thanks in part to new portable PC gaming hardware, which he called “an exciting new(ish) segment.”

Cloud Handhelds are Niche, For Now

Sony’s Project Q is an upcoming cloud-centric portable console that will let you play PlayStation 5 games over Wi-Fi. Source: Sony

Two device categories that have emerged as promising growth areas for portables include cloud gaming-centric handhelds and mobile game controllers. Cloud handhelds are incredibly niche at the moment, with many of the more exciting devices still in development. Meanwhile, mobile game controllers have been around for some time, but only recently have we started to see higher-quality products like the Backbone One and Razer Kishi.

  • While many Steam Deck competitors, and even the Nintendo Switch, do function as cloud gaming devices, a number of manufacturers are targeting a lower-cost segment of the market with cloud-centric portables that mix Android gaming with the ability to stream from platforms like Nvidia GeForce Now and Xbox Game Pass. 
  • The Logitech G Cloud is arguably the most successful of these handhelds to date, but Razer also released its Edge handheld in January. At between $300 and $400, both devices cost just a fraction of the much more powerful portable PCs. But you’re sacrificing native capabilities for streaming, which is beholden to fast interest connections that, as a result, undercut the portability factor to some degree. 
  • Sony is the other big contender in the category with its Project Q handheld due out later this year, but it also comes with some major compromises. While it does appear to sport a high-quality hardware design, the device is likely to be severely locked down. That means no Android emulators, third-party apps, or other sideloaded content. 
  • Sony is billing the device as a way to stream PS5 games over Wi-Fi using the PlayStation Remote Play feature. That does open up some possibilities for a PlayStation Plus tie-in with Sony’s cloud gaming service, which is currently available as part of the Premium tier. But we should expect this device to sell to only a small fraction of PS5 owners with an attach rate probably comparable to the PSVR 2, given the Q will likely cost a few hundred dollars at least.
  • Mobile game controllers are a less exciting segment, but do represent a promising growth area for cloud gaming providers that are trying to reach consumers who want to use the screens they already have instead of purchasing a dedicated handheld. While there are few major players here outside Backbone and Razer, there is ample opportunity for device makers to take advantage of 5G cellular connections and ever-faster processors in the iPhone and flagship Android handsets that make them formidable competitors to traditional gaming devices. 
  • As cloud gaming improves, however, cloud handhelds and mobile game controllers might become more attractive, especially as services like Xbox Game Pass and GeForce Now become more robust, add new titles (like Activision Blizzard games), and iron out the kinks in streaming tech more generally. There’s also the possibility of Microsoft getting in the mix directly with an Xbox-branded cloud device to build on the work it’s already doing to bring Game Pass to smart TVs.  

Portable gaming is experiencing an exciting surge in both manufacturer and consumer interest, and it will be fascinating to see where the market goes from here as costs come down, performance improves, and more developers begin to see the promise of developing games that can reliably be played on the go. It seems the industry (with the exception of Nintendo) has moved on from portables as closed ecosystems and is instead embracing an approach that treats these devices as bridges between ecosystems, platforms, and distribution methods.  

We’re already starting to see game studios promote new releases as Steam Deck-verified at launch, and Nintendo’s new Switch is undoubtedly going to shake up the market further with improved performance that opens the door to many more games going portable. And while cloud gaming still remains nascent, the promise of being able to truly play any game you want wherever you are remains a tantalizing prospect that should fuel further innovation in lower-cost handhelds. 

Sponsored by Lightspeed Venture Partners 

Portable Lightspeed

Partnering with extraordinary founders in gaming and interactive technology

Lightspeed Venture Partners is a globally leading venture capital firm with over $29 billion in capital under management and more than 500 investments across the U.S., Europe, and Asia. Over the past two decades, the firm has partnered with hundreds of exceptional entrepreneurs and helped build and scale companies to achieve 190 IPOs and acquisitions.

With its dedicated gaming practice, "Lightspeed Gaming," the firm is investing from over $7B in early- and growth-stage capital—the by far largest fund focused on gaming and interactive technology. Lightspeed's team combines deep expertise in gaming interactive technology with a global multi-stage investment platform and a culture that truly puts founders first.

Selected investments include Epic Games, Snap, and Stability AI—as well as game designers and producers who led the creation of titles like Fortnite, Call of Duty, League of Legends, Wild Rift, Apex Legends, Overwatch, Valorant, StarCraft II, and Warcraft III.

For more information or if you wish to reach out, check out the link below:

#2 Game of the Week: Remnant II

Source: Gunfire Games
  • Platform: PS5, Xbox Series X/S, PC
  • Developer: Gunfire Games
  • Publisher: Gearbox Publishing
  • State: Worldwide Launch
  • Genre: Third-Person Shooter

What You Need to Know: 

  • Remnant II is the sequel to Gunfire Games’ 2019 third-person action RPG that blends looter shooter, Soulslike combat, and roguelike elements. The game relies on procedural generation to randomize large swaths of the experience, allowing for unique playthroughs and impressive variability. You can watch a gameplay trailer here.
  • Gunfire Games set out to make Remnant II much more replayable than the first game, and this goal shines through in the game’s expanded approach to roguelike design that includes not just the randomized biomes you fight through but also storylines, side quests, and bosses. 
  • The game features a steep difficulty curve and satisfying boss fights in the vein of FromSoftware action RPGs, but with third-person shooter mechanics and deep buildcrafting borrowed from co-op shooters like Borderlands and Outriders. 
  • Remnant II supports multiplayer and allows players to join their friends’ worlds to help out with tough combat encounters and gain XP and loot in a way that is narratively consistent with the game’s take on the multiverse. 
  • One crucial downside to the Remnant II’s multiplayer approach is its lack of crossplay, so be sure to pick up the game on a platform where you know you have a friend or two already playing to avoid finding yourself stuck solo. 

The Verdict: 

  • Remnant II is a great reminder that even well-established genres, gameplay loops, and design ideas can still be remixed, blended, and improved upon in unique ways. The game is a brilliant combination of what has made big action and shooter games like Dark Souls and Destiny so successful with many of the roguelike innovations of the past decade’s best indie hits. 
  • While “Dark Souls but with guns” is in a way an accurate description, it undersells just how refreshing and rewarding Remnant II can be. The game comes as a complete package for just $50 and manages to pack in dozens to hundreds of hours of gameplay, while still being satisfying enough on a single playthrough to warrant purchase for those who don’t intend to go deep on its replayability. 
  • While the first Remnant, called Remnant: From the Ashes, was a bit of a sleeper hit, it’s clear Remnant II has fully broken through. The game sold more than 1 million copies in its first week, Gunfire Games announced, and nearly doubled the original game’s top concurrent player count with more than 111,000 simultaneous players on Steam last weekend. 
  • The studio has also managed to generate buzz with its secrets, including one the developer hid inside the game’s files so only data miners would discover it and spread it organically on Discord, Reddit, and elsewhere. 
  • Remnant II is a must-play for any action RPG or co-op shooter fans — though be sure to buy the game on a platform with friends. Its one clear and obvious deficiency is a current lack of cross-platform play, which hopefully Gunfire Games addresses in a future update. 

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